Staten Islanders warned: Tax time means tax scams

Associated PressIt's tax time, which means it's also time to be on the look out for internet scams and unscrupulous tax preparers.

STATEN ISLAND, N.Y. -- For some folks, tax time requires painful digging into the wallet. For others, it comes with the promise of much-needed cash from refunds.

But for everybody, it is a season to be extra cautious -- as bogus IRS emails arrive in inboxes, trying to trick people into disclosing personal data, and unscrupulous would-be tax preparers misrepresent their qualifications, or illegally advertise refund anticipation loans as "instant" or "rapid" refunds.

"There are substantial tax refund dollars waiting for New Yorkers," New York City Department of Consumer Affairs Commissioner Jonathan Mintz said today in a statement, noting that in the past decade, city residents have claimed almost $20 billion in Earned Income Tax Credits alone.

PROTECT YOURSELF

New Yorkers shopping around for a tax preparer, can take some steps to protect themselves from scams and make sure they get the full refund they're entitled.

Make sure:

The tax preparer signs and places a Preparer Tax identification Number on it.

The preparer provides you a copy of your tax return.

You do not pay cash.

Be cautious:

If they promise larger than normal tax refunds.

If they charge a percentage of the refund amount as preparation fee

If they ask you to add forms to the return you have never filed before.

If they ask you to place false information on your return, such as false income, expenses and/or credits.

Source: IRS, NYC Dept. of Consumer Affairs

"Since the IRS issues these refunds in such a short amount of time, there's no reason for such expensive, often deceptively sold loans getting in between you and every dollar of your refund."

A two-week long enforcement sweep of 850 income tax preparers throughout the city, resulted in violations issued for one in three income tax preparers.

Pushing customers into "rapid" refunds were among the more common offenses: These are actually predatory, high-interest loans that consumers must pay back even if their refund is not as large as they had anticipated -- a fact often not disclosed by tax preparers. RALs are not illegal in New York City, but tax preparers must communicate that they are loans, and can have annualized interest rates as high as 500 percent.

Meanwhile, the Internal Revenue Service is also warning tax payers to be wary.

"Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money," said IRS Commissioner Doug Shulman.

Phishing is an increasingly common scam, where unsolicited emails or fake websites prompt victims to provide the kind of sensitive data that would allow a criminal to commit identity or financial theft.

There are dozens of such emails circulating the ethersphere, and some examples are posted on the IRS website.

Scam artists also target taxpayers by posting flyers offering free money from the IRS, according to the agency. The advertisements suggest the taxpayer can file a tax return with little or no documentation, and have been appearing in community churches around the country.

People previously victimized by identity theft may receive an IRS notice informing them that more than one return was filed in their name, or they received wages from an unknown employer. This letter may be the first tip off that he or she has been victimized.

New Yorkers making $57,000 a year or less have access to free or low cost tax preparation, including volunteer tax assistance sites, and a discounted $29 return filed by H&R Block. For more information, go to nyc.gov/taxprep.